STOCKWATCH Next lower; cut to 'sell' from 'hold' at SG Secs; target cut to 800p
LONDON, Jul 31, 2008 (Thomson Financial via COMTEX) -- By Staff Reporter
SG Securities has cut Next Plc. to 'sell' from 'hold' after Wednesday's trading statement, saying the high street and catalogue fashion retailer is hemmed in by a difficult trading environment, according to market sources.
At 8:31 a.m, Next shares were off 18 pence at 977-1/2, while the FTSE 100 index was up 6.1 points at 5,426.8.
Next reported Wednesday a fall in first-half underlying sales at its Next Retail division, slightly above previous guidance but said it is still very cautious on the outlook.
In a note to clients Thursday, SG Secs said it is cutting its target price to 800 pence from 1,307, based on a 40 percent PE discount to the market compared with 20 percent previously.
The broker said a 40 percent discount is close to Next's historical trough, noting it does not think near-term newsflow prospects can support a significantly higher relative valuation.
tf.TFN-Europe_newsdesk@thomson.com tw/wj
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